- Silver continued with its struggle to break through a strong barrier near the $26.30-35 region.
- A short-term ascending channel seemed to constitute the formation of a bearish flag pattern.
- Bullish oscillators on hourly/daily charts warrant some caution for aggressive bearish traders.
Silver struggled to capitalize on its early uptick and witnessed a modest pullback from the vicinity of four-month tops, around the $26.30 region touched on Friday.
Looking at the technical picture, the recent bounce from the $23.80-75 region, or YTD lows stalled near a resistance marked by the top boundary of a short-term ascending channel. Given a sharp pullback from the key $30.00 psychological mark, the mentioned channel constitutes the formation of a bearish flag pattern.
The XAG/USD's inability to break through the pattern resistance and the subsequent pullback suggests that the near-term positive move might have run out of steam. That said, bullish technical indicators on hourly/daily charts warrant some caution before positioning for any meaningful near-term depreciating move.
Hence, any further pullback is likely to find decent support near the lower end of the channel, around the $25.20 region, which coincides with the very important 200-day SMA. This is closely followed by the key $25.00 psychological mark, which if broken decisively will confirm a breakdown and prompt some technical selling.
The XAG/USD might then turn vulnerable to weaken further below the $24.75-70 intermediate support and slide back towards challenging the $24.00 mark. Some follow-through selling will expose YTD lows, around the $23.80-75 region, below which the downward momentum could drag the white metal towards the $23.20 support zone.
On the flip side, any positive move back above the $26.00 mark might continue to confront stiff resistance near the $26.30-35 heavy supply zone. A convincing break through the channel barrier will negate any near-term negative bias and pave the way for a move towards the $27.00 mark en-route the next hurdle near the $27.65-70 area.
XAG/USD daily chart
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Technical levels to watch
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